Interview with Prue Bentley on ABC Radio Melbourne

Prue Bentley
All right. If you are trying to get into the property market for the first time, but you are watching prices rise and you are struggling to get a deposit, would you consider dipping in to your super to pay for it? What about using the entire balance to buy a home? Well, the Federal Coalition's considering making this a part of their housing policy. Senator Andrew Bragg is the Liberal Party's Home Ownership Spokesman and with us now. Andrew Bragg, good afternoon.

Senator Bragg
Prue, how are you going?

Prue Bentley
Look, I'm really well. Isn't super, though, meant to be exclusively for your retirement?

Senator Bragg
Well, I think that there's been some very rigid thinking here. I mean, the idea that super is the only way you can have a good retirement is flawed. The key determinant of your success in retirement is not your superannuation balance. It is your home ownership status. What's happening now, Prue, is that we're seeing generations of Australians, the millennial's and the Gen Z's, not on track to get into a home of their own. That's what we're trying to arrest.

Prue Bentley
How does this work? I mean, millennial's and Gen Z's, by in large, unless they're in very high paying jobs, won't have huge super balances in the first place, will they?

Senator Bragg
Well, if you look at the average 38-year-old millennial, they would have $80,000 in their super. You have $80,000. You're in Melbourne, so that would get you close to entry level. You need to do a bit more work in Sydney. But absent the bank of Mum and Dad, this is the only opportunity many Australians are going to have to get the size of capital that they need to get into the market. So I think a government denying people access to their own money for this purpose is pretty mean and nasty.

Prue Bentley
If you were to make this policy, would you put in any guardrails around who could actually access this money? Would it be open slather? Everybody, just first-time buyers?

Senator Bragg
We've always had a country where we've prioritised home ownership. Robert Menzies said that he wanted Australia to be a nation where people had a little piece of earth that was their own. We've traditionally had quite high levels of home ownership, and now that's starting to collapse. First home buyers are our priority in the Liberal Party, in the coalition. We want to try and tilt the scales in their favour.

Prue Bentley
Okay. Would this help to get more housing stock? Because This is, of course, one of the big issues of the day.

Senator Bragg
No, you need to build more houses, Prue, and you need to improve supply. That is a key component here. Unless you build a lot more houses, then the housing crisis cannot be solved. But we want to build houses which are owned by people, not owned by institutions. The problem with the government's approach here is that they want to have all the houses to be built by big super funds and foreign fund managers, and then have those houses rented out to Australians. So they're basically giving up on individual ownership, but we want to see individual Australia's own houses, not institutions.

Prue Bentley
I'm speaking with Andrew Bragg, who's the Shadow Assistant Minister for Home Ownership and a Liberal Senator for New South Wales. Andrew Bragg, have you done the modelling on this? Do you have any sense of how many people would want to use this function?

Senator Bragg
Well, I think there'll be a lot of people in their 30s, particularly couples, that I would like to use this straight away. And if someone did this or a couple did this for a flat that might be worth $800,000, they would be much better off over the longer term than if they left their money in super. So I think you can measure this in economic terms, Prue, but there's also the Darryl Kerrigan effect here. I mean, a house is more than just an economic measure, or factor, but it is a very important economic factor for people in retirement.

Prue Bentley
Andrew Bragg, hold the line there for me. Derek's in Brunswick. What do you think about this idea, Derek?

Derek
I think it's a great idea. Based on, just on the investment return, our housing market has more than doubled in the last 10 years. If whoever is taking out their money to get their first home, if that money can double in the next 10 to 15 years, I think it's a brilliant idea. As your guest is saying as well, this is only for first home buyers, I'm assuming, as he said, it's going to be for young people, young couples in the 30's or mid-30's. I get people that do have bad property investment decision as well, but we're still young enough to pay that off in the short future, hopefully, if we did make a bad decision.

Prue Bentley
Would you worry that it might put more upward pressure on prices?

Derek
I would worry on that part, but we have another choice for young... I'm in my early 30s, and me and my partner, we're trying to get our first home, and I think it's a brilliant idea with the circumstances we are in right now.

Prue Bentley
Thank you for your call, Derek, on 1-300-222-774. Andrew, Derek's obviously a fan of the idea, but what do you make of the suggestion it will put up house prices?

Senator Bragg
Well, the economists who are independent and haven't been bought off by the big super lobby, which is incredibly powerful, don't believe that there would be a major change to the prices as a result of this policy.

Prue Bentley
What about issues like negative gearing? This seems to be a bit of a sacred cow in Australia, and many politicians are pretty leery of touching it. But would you be looking at negative gearing?

Senator Bragg
We don't think that increasing tax is going to result in more houses being built, and we want to see more houses being built. So the reality is that most of the houses which are negatively geared are owned by just individuals. And in fact, the tax office data tells us that more than 70 % of the investors in the housing market own just one property. So there are a lot of mum and dad landlords out there that have used negative gearing, and they are actually adding to the supply of housing in Australia. I don't think changing that will help us.

Prue Bentley
I'm speaking with Andrew Bragg, the Shadow Assistant Minister for Home Ownership and Liberal Senator for New South Wales. Let's just get this straight. You are talking about being able to use your entire super balance to purchase your first home, not a second home, and not to pay off the balance of your mortgage? Would that be included?

Senator Bragg
What I've said is that the starting point is we had a policy at the last election to allow Australians to take $50,000 of their own super and to use it for a first home. That is still our policy, the policy of the coalition. We're looking to see whether that could be enhanced. There's a senate inquiry into that, and we will look at the threshold to see whether that's a high enough threshold. I suspect that in markets like your own in Melbourne and in Sydney, it's not. But we're also looking at things like using super as a mortgage offset. So I don't see any great value in forcing Australians to pay very high fees to superannuation companies while simultaneously being forced to pay high interest rate costs to banks. If people want to own their own house more quickly with their own money, they should be able to.

Prue Bentley
Just before I let you go, Senator Bragg, let me put this to you. The withdrawals that people made during COVID, they have been calculated that they will cost Superfund members $85 billion in retirement savings. Why do you think this will work differently now?

Senator Bragg
Is that the super funds analysis?

Prue Bentley
Pardon?

Senator Bragg
Is that the super funds analysis?

Prue Bentley
Yes, the super funds analysis.

Senator Bragg
It's like asking Dracula about the blood bank. Of course, they want to lock all our money up under lock and key for 40 years because they want to charge high fees on it and send big payments off to the unions and banks. The reality is the Super funds will always put out dodgy analysis to support their cause. Of course, as Paul Keating said, always back to self interest because at least you know it's trying.

Prue Bentley
Andrew Bragg, thank you for your time this afternoon.

Senator Bragg
Thanks Prue, cheers, bye.

Prue Bentley
Andrew Bragg, the Shadow Assistant Minister for Home Ownership and Liberal Senator for New South.

[Ends]